Veeco Eyes Process Metrology Expansion

Veeco Instruments Inc. has picked up the ball that was dropped last year when Zygo Corp.'s planned merger with Digital Instruments Inc. collapsed. To improve its position in process metrology, Veeco has signed a definitive merger agreement with Digital Instruments of Santa Barbara, Calif.
Veeco makes etch and deposition process equipment and process metrology tools. Both Zygo and Veeco have been trying to improve market share by expanding their services, a goal that finds both companies acquiring and merging at a fair pace.
The merger with Veeco is a more comfortable fit than it would have been with Zygo, according to Virgil Elings, president and co-founder of Digital Instruments. Certainly, after talks with Zygo stalled, Digital was willing to consider other merger agreements, he said.
Fran Brennen, Veeco's director of marketing communications, did not know whether Veeco had been interested in merging with Digital before or after Zygo's negotiations stalled. "It certainly created an opportunity for us," she said.
Brennen said she expects the merger to make Veeco No. 1 in the atomic force microscopy market. The merger would enable Veeco to expand its offerings in atomic force microscopy, having already added optical profilers to its line when it acquired WYKO Corp. last year. "Actually, we'd be the only company in the industry to offer such a wide array of metrology products," she said.
Digital is beginning to move its atomic force microscopes into the production arena, Elings said, and would benefit from Veeco's experience there. "What we get, really, is some infrastructure that we would've had to develop ourselves," he said.
If approved by Veeco shareholders and accountants, and federal agencies, Digital shareholders will receive about 5.6 million shares of Veeco common stock. The merger is expected to be completed by the end of this quarter.